JKJ

I am reasonably satisfied with my response to the economic calculation argument of von MIses and other Austrian economists.

See

http://economsoc.wordpress.com/the-economic-case-for-social-ownership/

http://werdiscussion.worldeconomicsassociation.org/?post=re-opening-the-debates-on-economic-calculation-and-motivation-under-socialism&cpage=1#comment-1837/

My main point is that a socialist economy would be in no way limited in its ability to use a decentralized price system as long as it can find an alternative to the profit motive to drive it. This new motivation would be provided by satisfaction from work and the desire to contribute one's best efforts. You may not believe this change in motivation is possible but it is a different matter from von Mises' technical impossibility argument. It is a debate over whether it is possible in practice.

Loudmouth said

"Socialism had its chances, in a multitude of different settings overs the past century. It blew every one. It's not a goer."

I cannot recall a socialist revolution occurring in an advanced modern capitalist society. So socialism hasn't been tried yet in the only conditions where it would have any real chance of succeeding. You could argue about whether we would ever get a revolution in such a society but that is a different issue.

Hi JKJ,

Both. Socialist theory, even Marx's, had obvious flaws (and possibly reactionary undertones, of hankering to go back to a mythical Golden Age of love, sharing and working together), AND it worked even less well in practice.

And frankly, it's not something I am interested in spending much time on any more, except to caution younger players not to be stupid enough to follow in my clumsy footsteps.

I've been thinking that Bolshevism engendered Fascism - anti-democratic movements seem to inevitably move in that common direction, with all the ghastly trappings of the 'necessary extractions', the untrammelled power for those in power, the blatant falsities that everybody parrots. And frankly, I don't know which was worse.

Fighting for genuine democracy, of the many against the few, as chaotic in opinions as possible, as open as possible, open and un-prescripted societies against the most beautifully sculpted and perfect-looking, ready-made, closed Good Society -those are the never-ending tasks. Nothing once and for all. That way lies Fascism.

Joe

David
I think you deserve credit for at least recognizing the problem. Almost all socialists are completely ignorant of it, and merely repose open-ended credulity in a supposed economic super-competence and benevolence of government that has no basis in evidence or reason.

Your central argument seems to be that socialist trustees could buy and sell production goods, and hence give rise to a price system. Therefore assuming that they were motivated to use the trust property, and devote its fruits, for the good of "society", there is no reason why economic calculation is intrinsically impossible under socialism. Thus the economic calculation problem is assimilated to the profit motive problem.

Main objections are these. If your assumptions were true, there would be no need for any governmental action. People could achieve it by their own voluntary actions.

The fact people don't do this, proves that two foundational assumptions are invalid.

Firstly, it's not true that the motive to selflessly benefit strangers is greater than the motive to benefit oneself and one's kin; and I think your reasons it supposedly “would” under socialism, are far too weak a prop for far too heavy a burden. (In fact your assumption, while not impossible, contradicts evolutionary theory. So unless you're going to come up with a different account of the origin of species, you've got a major theoretical problem.)

Secondly, you have assumed that government is or would be more representative of society, than society is of itself by its own voluntary actions. This assumption has no basis in evidence or reason; totally lacking a theory of the state.

Also, if the socialist trust properties included only major enterprises, the economic calculation problem would persist as concerns all excluded capital goods.

But if the socialist trust properties includes all capital goods
a) how does it work?, and
b) account for the costs?

Either way, you have not established that the system would equal or better capitalism, in your own terms, and *even assuming no issue as to profit motive*.

I do not accept your arguments or assumptions about public goods, externalities, taxation, or monopolies.

Really it's just a more complicated version of "Wouldn't it be nice if everyone was nice?" theory.

It reminds me of the anarchists who, when you ask them how it's going to work, tell you that no-one's going to be selfish or aggressive. That's really what you're assuming.

The very fact that, according to you, the countries most ready to do what you have in mind, are those in the capitalist economies where work has become more fulfilling and less irksome
a) contradicts your assumptions about alienation
b) is a recommendation of capitalism, not a criticism
c) gives no reason to think that it would continue or be better under socialism.

Like byork, you have just assumed that the productivity and innovation of capitalism would continue, without the profit motive or related entrepreneurship. "Wouldn't it be nice if everyone just gave away all their net income to other people?".

Mises by the way deals with your thesis by defining the owner as "those on whom the losses fall". Therefore the socialist trustees would not be, and would not function as the owners. The owners would be those the state had violently expropriated, not the political priviligentsia they had favoured with other people's property.

(Mises assumes, with the rest of the world, that owners will be more concerned to preserve their own interests than to serve others at cost to themselves. The Austrians have virtually regarded it as axiomatic, and I think if I, or you, had to bet on it, the smart money would be on Mises, not you.)

Basically you have not taken the discussion any further than Marx, who simply assumed without any real explanation, that the profit motive would disappear under socialism, and that the working class would benefit more economically from socialism than from capitalism.

But like you, he never gave any real reason, he just baldly assumed it.

So I don't think you should be reasonably satisfied with your response to the economic calculation argument. And I think one should always be seeking to falsify, not to confirm, any theory, especially one's own.

Dear Joe,

<<So what can ameliorate the excesses of capitalism ? How can democracy be extended and enriched to counter some of those excesses?>>

it seems quite clear that socialism is not the solution, first and foremost because it cannot be implemented without violence. It seems also clear that from a purely economic perspective, capitalism produces more and brings about economic growth.

But capitalism isn't good either because it results in competition, which causes:

* stress - having to work under unhealthy pressures, including ethical pressures.
* anxiety - for lack of job security and the constant demand for new or different skills.
* hatred and malice - towards competitors.
* the bane of advertising - encouraging greed, discontent, vanity and waste by purchasing goods and services otherwise unsought for, including unhealthy ones.
* disregard for the environment.
* inferior products which deliberately do not last (so that more can be sold).
* lack of stability and predictability - which wastes everyone's time around researching new products, studying how to use them and constantly tackling their teething problems. The purpose of these products is supposedly to save us time for what is really important in life (eg. our spiritual journey, or at least our families and/or friends), but instead they leave us time-impoverished and physically tired, reduces family ties and leaves very little time for human contact.

I can't see a solution unless we can undermine the materialism that underlines both capitalism and socialism, unless we have a spiritual foundation strong enough to counter greed, envy, malice and vanity.

As opposed to the violence of materialistic socialism, there is the possibility of a society that creates similar communal structures - but voluntarily, in the spirit of good-will, without a trace of coercion, where participation is not forced on the general public, such structures which balance the security of having our bodily needs met with supporting our spiritual aspirations. However, the devil in the human genes is strong and only the strongest faith and common spiritual values can succeed and withstand the temptations where naive assumptions of good-natured humanism failed.

Hi Yuyutsu,

"As opposed to the violence of materialistic socialism [and capitalism], there is the possibility of a society that creates similar communal structures - but voluntarily, in the spirit of good-will, without a trace of coercion, where participation is not forced on the general public, such structures which balance the security of having our bodily needs met with supporting our spiritual aspirations. However, the devil in the human genes is strong and only the strongest faith and common spiritual values can succeed and withstand the temptations where naive assumptions of good-natured humanism failed."

No, I don't envisage that happening either, too many internal contradictions. It's over, boys.

Of course, we all need dreams. I'm in a singing group, Sing Australia, and sometimes we sing John Lennon's 'Imagine'. I can't stand it, I call it 'The Syria Song'. And also 'I'd Like to Teach the world to Sing in Perfect Harmony'. Dream Songs.

So how to ameliorate the worst excesses of capitalism ? That's the boring, hum-drum, no-flashy-revolutionaries-on-the-barricades stuff. No ready-made Good Society prescriptions, that's the road to fascism. As, surprisingly, Hayek wrote about. And Popper. And they were right.

Back to the hard grind of doing what each of us can, to leave the world a slightly better place when we go. Nothing flashy, nothing megalomaniac. Just sheer hard work.

Joe